Leasing In Turkish Agricultural Sector

Farms need to have some investments like land, construction and machinery to sustain their activities. Selection of the financial technique is one of the important decisions when making the investments. In Turkey, the credibility of agricultural sector is generally lower than other sectors due to the formation of small-scale farms. However, farms need financial resources to increase their capacities by investing in the use of advanced technology, renewing machineries at a suitable cost. Leasing has many advantages compared to bank credit. In leasing, all cost of investments can be financed, 1% value added tax (VAT) in some goods can be applied and assurance conditions may be lighter. Farmers benefiting from VAT advantage will find an opportunity to renew machines under suitable economic conditions, by this means, the expenses arising from machinery use will be reduced. In bank credits, farmer's land is generally mortgaged. In case of making the investment by leasing, farmers will be free of mortgage pressure. Farmers will produce with lower cost and lower debt pressure by benefiting from the advantages of leasing. Thus, the demand of investment goods and created added value will increase.